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rental property, tax considerations

Tax Aspects of Owning a Rental Property


Dec 4, 2015


“I own a rental property, what do I need to know about tax?” Adelaide accountant Kym Nitschke writes about the most important considerations.

Generally owning rental properties is an investment, and you are not carrying on a business. Always seek professional advice, but the following considerations will help you.

Income you must declare

– Bond money you are entitled to retain

– Insurance payouts where the payout compensates for damage to your property or for lost rent

– Letting and booking fees

– Reimbursement of deductible expenses eg. amount received from tenant to repair damages, government rebates

Expenses you may be able to claim

– Management costs

– Repairs and Maintenance costs

– Water charges

– Land tax

– Insurance (building, contents, public liability)

– Interest expenses

– Travel undertaken to inspect the property

Expenses you can‘t claim:

– Expenses paid by the tenant eg. water & electricity

In the following cases you would only be able to claim a deduction for the portion that relates to the income producing use:

– Your property is only available for rent for part of the year

– You rent out the property below market rates eg. to family and friends at a discounted rate

Depending on the loan against the property, an advantage of owning a rental property is the finance is generally negatively geared. When it is negatively geared, the expenses are greater that the income. The loss for the financial year on the rental property can be used against you personal income (eg wages, salary or business income) to reduce your taxable income, resulting in less tax payable.

There are many tax aspects of owning a rental property. At Nitschke Nancarrow, we’re happy to help you. Call our Adelaide office on (08) 8379 9950 or send me an email.

– Kym Nitschke

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